Ex-Morgan Stanley CEO John Mack warns about the biggest risk he sees to markets

John Mack, former chairman and CEO of Morgan Stanley, tells CNBC he sees "geopolitical risk" as the biggest threat to global prosperity.

"Hopefully, nothing happens. But there's a lot of turmoil, whether it's in the Middle East ... North Korea ... or China and their [disputed] islands," Mack said on "Squawk Box," citing the risk of a "geopolitical blow-up" as his top concern.

"All it takes is for one person to make a mistake. And then you have a global event," he added in a wide-ranging interview that included his thoughts on the United Kingdom vote Thursday on whether to stay in the European Union trading block.

"I like to take risk. I bet they don't leave. So that's where I put my money down," he said, concerning the Brexit referendum. He said he did not bet in the financial markets. "I did it with the bookies in London."

In a separate "Squawk Box" appearance Monday, BlackRock Chairman and CEO Larry Fink said he's "still nervous" about a Brexit but hopeful Britain stays in the EU, which he argued would help boost global stock markets, including Wall Street.

Meanwhile, Mack said he owns stocks in China and believes the government there will solve, over time, the forces putting a drag on the world's second-largest economy.

"I've always been bullish on China. Are they have having some issues and problems? The answer is yes," he admitted. "[But] I have a lot of confidence in the leadership of that country."

Some of the "issues and problems" that Mack was talking about are China's excessive debt levels and the bumpy transition from export-led growth to a consumption and services model.

As a quality-of-life issue, Mack said: "Clearly there's dissatisfaction on the environmental issues in China. I think that is a larger issue than we think of here in the United States or maybe in Europe."

Mack talked about the smog choking many of China's biggest cities. "When you see pictures of someone walking down the street and you can't see across the street, because of the pollution — I think that's a huge issue."

In a second stint at Morgan Stanley, Mack served as chairman and CEO from 2005 to 2009. He gave up the chairman title at the end of 2011.

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